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[Unofficial Transcript]
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[Mr. Farenthold] ... shore in California;
you talked for a minute about the tragedy
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with the BP blowout in the Gulf of Mexico.
Being from Texas, let's talk a little bit
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about the Gulf of Mexico, if you wouldn't
mind.
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The U.S. oil companies aren't the only ones
drilling in the Gulf of Mexico, are they?
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[Mr. Hull] You know, I don't believe so. But
I have to be honest with you. Our purview
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includes only the western United States. I'm
not familiar with who's operating in the Gulf
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of Mexico.
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[Mr. Farenthold] As a lawyer, I don't ask
you questions you have to answer to.
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And you've actually got China drilling off
the coast of Cuba; you've got the state oil
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company in Mexico that's drilling in the Gulf
of Mexico as well.
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So regardless of what amount of regulation
we put on our domestic oil companies, we're
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not going to have any effect on what China
and Mexico do. We can't change the way they
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drill.
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Would that be an accurate statement?
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[Mr. Hull] I think that's correct, sir. I
mean, I think the Chairman mentioned too that
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while we are seeing prices at these very high
levels, apparently related to the unrest in
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the Middle East, the longerterm picture is
not just, you know, their these other emerging
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economies are very actively and aggressively
out in the world market looking for new production
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opportunities, they're buying a tremendous
amount of oil, and it's creating upward
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[Mr. Farenthold] So do you think a better
regulatory scheme or better way for the taxpayers
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to spend their money, rather than making it
more difficult for y'all to drill in the Gulf
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and compete and make permitting and all these
regulations, might be to invest a little bit
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of time and money in the response, training
and technology, so in the event something
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happened in a well owned by or operated by
another country, we'd be able to respond to
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that as well as if something happened locally.
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[Mr. Hull] I lost the question. I apologize.
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[Mr. Farenthold] Rather than putting excessive
regulation on our domestic companies, making
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life difficult for them to compete, let's
say, in the Gulf of Mexico, where you've got
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Mexico and China also drilling something happens
on a Mexican and/or a Chinese drilling rig
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and there's a blowout or a leak or something,
wouldn't we be better off, rather spending
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our time and effort regulating domestic companies,
coming up with responses that would benefit
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any worldwide oil company, training and technology?
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[Mr. Hull] Well, I think the U.S. oil and
gas industry have led the world in developing
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those kinds of responses. In California, of
course, we have huge resources on standby
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24/7 to respond and have developed, along
with other regions of the country, this technology
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that really is used worldwide to respond to
any accidents that occur.
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[Mr. Farenthold] Well, I'm over time. I'll
let everybody else have a turn.
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[Chairman Issa] I assure you, we will as long
as our witnesses are willing to indulge us,
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we would like to learn all we can.
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[Mr. McCarthy] I thank all the witnesses for
their testimony. And it really comes down
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to why we're having the hearing and why we're
having this challenge. We use more energy
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than we produce in this country. Having said
that, that means we have to get it from somewhere
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else; so we pay for it from somewhere else.
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The challenge that I've always faced in this
job is: Too many times we think in California
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we realize other states compete with us. We
have the ability to say which state produces
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more. We watch every day when a U.S. company
leaves California or somewhere else because
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they maybe give a little better price. We
never really think that America competes with
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other countries, but we do. And energy is
probably the Number 1 industry that you can
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find that that could happen. If we make it
harder here, we will still buy it somewhere
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else.
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Now, this country has faced a lot of challenges.
And normally when we face a challenge, we
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meet a goal and we go forward. We've done
that in World War II. We achieved our goal.
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When we found that Russia went to space first,
we made a goal for us and in a decade, we
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achieved that goal too. We faced our attention
on that.
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For too long in energy, we only face our attention
when the problem gets too big, and then we
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put our attention there, then we forget about
it when it comes down because we don't have
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the ability to go there. If anybody's ever
lived in a community that has oil, you've
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seen the booms and the busts. If you've lived
in this community, you watched a time where
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the cost to lift it was more than the barrel
you could even sell it for. But you could
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not shut it down so you had to maintain it.
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I have found that the country gets very divided.
Now, a time that we all get united is usually
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during the Olympics. Why is it that we cheer
for our country? We never ask them whether
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they're Republican or Democrat. But the other
reason why we cheer so strongly is because
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America is the level playing field. We do
a 100yard dash, we all start at the same starting
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point; we all have the same finishing line.
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So we've got to think from that mindset too,
that when we make stuff more difficult here,
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someone else will still be drilling someplace
else that have different protections on the
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coast then we would have.
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And so taking some of that, I thought some
of this some of this ability is what I saw
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here today. I loved the presentation where
you've actually shown how it was going.
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Now, technology has changed. And probably
the best analogy I've heard from somebody,
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if you think of a bathtub and you fill it
with water picture that underground, that
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that's a natural resource. An old way of doing
it was putting a lot of straws into the bathtub
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and trying to get that water out. Horizontal
is fundamentally different. Now we can just
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go to the drain and use one. So that's one
over the land, and that's one ability to bring
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it up in a different capacity, and it's environmentally
safer.
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When oil was first discovered in Kern County,
it was untapped. There's pictures of people
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in a boat, not in water but in oil. It's a
fundamentally different place of where we
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have it now and our protection.
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But I want to take that technology a little
further, and I want to follow up with Mr.
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Whitsitt.
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When you do the fracking, you had shown in
your graph that there has been some people
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bring up the issue about the water table and
the protection. If you can walk me through
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that one more time to show where fracking
goes and where the water table is and what
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protections we have in going and using the
technology.
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[Mr. Whitsitt] Great question, Congressman.
Water tables or the aquifers that are drinkable
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are essentially shallow, and with very few
exceptions, as I've indicated, a few hundred
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feet below the surface.
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The states require and we, with our practices,
implement a very strict regimen of sealing
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off those water sources at the surface or
close to the surface with multiple layers
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of steel and cement, and then the frack job
is done through those layers that seal off
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the water.
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[Mr. McCarthy] And when you normally do the
fracking, how farther down is that from the
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water table, itself.
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[Mr. Whitsitt] Thousands of feet, in most
cases. Certainly 15,000 feet is not uncommon.
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We, at Devon, are doing 8 to 10 to 12,000
feet, and so you're well below, far below
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the water sources.
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In Canada I will mention too and this goes
to other things we're doing to try to protect
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both water quality and quantity and quality.
We actually in our heavy oil operations in
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Canada have found ways to use nonpotable water;
so we use no freshwater to generate steam.
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And we're trying to find areas where we can
do things like that all the time because we
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are very much in tune with concerns that are
very legitimate, particularly in the west,
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about water issues.
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We also try recycling where we can; we do
it where we can. And we also blend water;
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so we use flowback water to put in the next
job, if we're able to do that. And we're making
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progress on that technology all the time as
well.
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[Mr. McCarthy] Now, we all know that one form
of energy is not going to get it done. We
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also know that as advancements go, we will
have renewables that have great potential
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for the future, but we need that bridge. The
challenge that we have is that we have to
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have a policy that allows us, with the ebbs
and flows of the cost, to actually bring the
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cost down. Because our economy, 70 percent
is based on consumption.
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With the price of oil rising so rapidly, what
happens is: People are still paying that cost
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to business, and they're taking consumption
out of the economy; so our economy drops.
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But that price still goes someplace else and
goes out to another economy.
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So, Rock, you brought up insight talking about
the taxes, that they are very similar and
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the same taxes based upon any other business.
Which of you could explain that a little further.
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[Mr. Zierman] Well, there's been a lot of
discussion about whether or not oil companies
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receive subsidies. And I was trying to make
the distinction between a subsidy and a tax
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treatment.
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In fact, first of all, the actual components
that are within the Administration's budget
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that they want to eliminate target independent
producers, not major oil. So that's the first
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distinction. Most of those tax treatments
are not available to major integrated oil
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companies; they're only for the independents.
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But the second, more important point that
I was trying to make is: A subsidy is a cash
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payment from the government for doing some
sort of activity. It's quite different if
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you are having a debate within the IRS about
how to treat a certain expense. And we do
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have to have that debate. But keep in mind,
the only way that you have this debate and
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the only way that you have these expenses
is if you're deploying capital. And that's
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exactly what our companies are doing is they're
deploying capital. And the question is: How
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best can they redeploy the new capital?
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And that's what a lot of these tax treatments
were designed for. Given the fact that this
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is highly risky, it's very expensive, and
our energy security depends on it, the taxes
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in the teens and '20s, a hundred years ago,
were designed in order to encourage the rapid
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reinvestment of this capital back into the
oil and drilling programs. And that's exactly
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what we've experienced.
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[Mr. McCarthy] If you do not invest the risk,
you cannot get the tax.
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[Mr. Zierman] That's correct.
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[Mr. Whitsitt] Can I just add one point here,
please? I'd just inject for Devon and we are
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a large independent exploration and production
company.
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The recent proposals by the Administration,
just on the intangible drilling costs which
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are the real costs, as Rock has pointed out,
in drilling a well it's clearing the land,
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doing the environmental remediation. If those
proposals were put in place, it would cost
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Devon about a billion dollars in the first
year. And that would equate to our complete
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drilling program in the Barnett Shale as I
mentioned, is where the shale revolution really
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started, and it's the most prolific area in
the country.
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To us, we have to say, "What is that all about?"
That looks to us like it is totally a wrongheaded
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policy that actually would penalize the companies
that are most efficient at producing domestic
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resources that power this nation.
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[Mr. McCarthy] I want to go to Assemblywoman
Grove because she has witnessed, one and kind
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of all your presentations the redundancy of
regulation, not just with oil, with renewables,
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trying to find from wind and solar out in
East Kern.
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But from her own personal experience in a
business, finding out because of what California
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does, we're setting up business in another
state.
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So I wonder if you can touch on, one, redundancy,
what you are viewing outside in the district
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as well with our ability to produce more energy
in America.
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[Ms. Grove] Thank you. With all due respect,
I would like to address just one thing prior
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to. We talked about taxes or tax that you
guys were just addressing.
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Industry, meaning the oil industry, is now
at 41.4 percent of tax. And if California
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liberal politicians have their way what we're
fighting up in that building right now and
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they did a 12.5 percent oil severance tax
it will increase the industry tax to 53.9
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percent.
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Now, to give that number some perspective,
if you take Apple in 2010, they paid 28 percent
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of its revenue or profit to the government
Apple did while it generated more profits
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than Chevron. So in perspective, the oil industry
is being punished on a tax base and than other
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employment agents or industries.
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If you go back to Mr. Chairman, you had a
question earlier about the "average prices
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of crude and profit." And everyone in business
knows that somebody could say, "Well, you
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run a $25millionayear corporation," but after
you pay payroll taxes, workers' comp, liability
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insurance, and you get down to net profit,
it's less it's around $100,000, not in the
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millions.
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So if you take Apple, for instance, again,
in a comparison, the average products sold
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are about 25 percent above the cost of materials
and production for marketing and sales. And
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if you use that for the same in comparison
to with Exxon, Exxon's profit margins, in
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comparison, were about 8.7 percent. And that's
hardly the windfall that people are proclaiming.
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If you take the oil industry as a whole, they
have 11.5 percent basic on profit and making
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that the 45th most profitable industry of
the year. That is hardly close to the top
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ten. So just to clarify those two things.
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And then back to your question, Mr. McCarthy.
I'm sorry. You know, from a business standpoint,
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being a third and sometimes fourthtier contractor
for the oil industry, the job multiplier that
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we have and I ran on jobs. You know, we have
2.5 million people unemployed in the state
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of California, which affects our federal revenue
as well. And when I ran on jobs and you look
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at what industry can place in these jobs,
you talk about the job multiplier.
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A lot of individuals in the testimony have
referenced the oil industry jobs. And I'm
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going to name a few local companies. If you
take one oil field job in a platform, you
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have engineers, and you have site engineers,
you have chemical engineers, you have mechanical
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engineers, you have people that are the "job
multipliers" is what I call them.
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If you build a site, you have an excavation
crew, a site crew, a gravel crew. The gravel
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is produced someplace, mainly in one of the
facilities that we have either on the Grapevine
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or in Mojave. You have trucking companies
that transport that gravel to the site. You
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have everything from all those companies that
are supported by oil or Big Oil small oil,
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independent oil. These are small businesses
that thrive on this industry. You have people
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that supply more paper and pencils and products,
like from Stinsons or O'Leary's. You've got
0:15:12.750,0:15:16.940
the simple things like Mona at Speedway Market
where 90 percent of the people that go to
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work in the oil fields stop and purchase stuff
from her for their daily consumption of food
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and breakfast.
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So when you look at the small business that
thrives on this industry, the jobs that are
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created and not created from private business
because of the limitations with permit delays
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through the Division of Oil and Gas or I've
seen projects delayed out in the oil industry
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where a bluntnosed leopard lizard is on site
and they CAUTIONtape it off and everybody
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sits around and waits for this lizard to leave.
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You talk about Mr. Layton talked about a description
of a job that's being delayed, where the activity
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of this bluntnosed lizard is at certain times
of the year; so you just have to stop working
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until this lizard finds its way to another
location or goes into some type of hibernation.
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Those things don't make any sense when it
comes to job creation.
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The oil industry and job creators are very
conscious of things that need to be done to
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protect our environment and our land, but
California and the Department of Fish & Game
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and federal EPA is way overreaching and has
become completely unreasonable, to the hindrance
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or fullout assault to privatesector job creation.
0:16:28.380,0:16:33.779
[Chairman Issa] Assemblywoman, if I can follow
up on that. Is there really any difference,
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in your estimation, between the crazy or the
excess, as you're describing, in oil and the
0:16:41.230,0:16:45.670
same excesses that are occurring that are
delaying green energy rolloff? Because this
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is also an area of the state that has the
potential to provide an awful lot of solar
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and other energy. Don't you find the same
thing to be true, that the same selfinflicted
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wounds are hurting our ability to reach any
reasonable goal of renewables?
0:17:00.150,0:17:05.679
[Ms. Grove] That's exactly true. And it's
not only in renewable energy. You take in
0:17:05.679,0:17:10.899
East Kern, which I represent as well, there
was a solar plant that wanted to put a solar
0:17:10.899,0:17:17.249
facility in the Mojave Desert, where the sun
is, and it was not able to do that because
0:17:17.249,0:17:19.129
of a Mojave ground squirrel.
0:17:19.129,0:17:24.019
You look at industry just private business
industry across from development. I have a
0:17:24.019,0:17:28.319
developer in Taft who's had a certain piece
of property who cannot develop that property
0:17:28.319,0:17:35.319
and provide affordable housing in Taft, where
we have a large oil production area, because
0:17:35.450,0:17:39.529
of squirrels that live on that property. And
you have to tag them and put a little antenna
0:17:39.529,0:17:42.549
on them and transfer them to you know, double
the amount of property.
0:17:42.549,0:17:43.350
So the environment
0:17:43.350,0:17:49.139
[Chairman Issa] You saw all that on Animal
Planet. It was very impressive. It's not very
0:17:49.139,0:17:51.230
productive for mankind, I guess, but
0:17:51.230,0:17:57.929
[Ms. Grove] It is not, and not productive
for job creation in our state and in our nation.
0:17:57.929,0:18:02.990
You know, I recently had the opportunity to
go to Texas. And it was very interesting
0:18:02.990,0:18:04.249
[Chairman Issa] And see the governor, I understand.
0:18:04.249,0:18:06.299
[Ms. Grove] I did. I got to meet Governor
Perry.
0:18:06.299,0:18:10.019
And what was interesting is that we talked
to the Department of Railroad oversees their
0:18:10.019,0:18:15.110
permit process in Texas for some I'm not really
sure about that, because the Railroad is the
0:18:15.110,0:18:17.039
permit process.
0:18:17.039,0:18:21.399
And keeping the same environmental protection,
protecting our land and being conscious of
0:18:21.399,0:18:26.990
our planet, they issue permits within two
to five days, project permits, where we're
0:18:26.990,0:18:33.990
sometimes delayed for up to years. That, and
then the environmental delays with major species
0:18:34.659,0:18:41.600
on these projects and properties causes jobs
that we desperately need here in our state
0:18:41.600,0:18:44.649
and our nation to be delayed as well.
0:18:44.649,0:18:49.289
[Chairman Issa] Rock, you said something,
and I want to try to put it in the record
0:18:49.289,0:18:54.289
in a way that people who are not involved
in the oil industry can understand.
0:18:54.289,0:18:58.570
You know, I came from the electronics industry.
We watched the government come up with this
0:18:58.570,0:19:03.740
interesting one that our patents. If we had
a patent and we went through and we paid the
0:19:03.740,0:19:08.710
legal fees, we had to amortize the patent
over the life of the patent. All the cost
0:19:08.710,0:19:13.190
we pay to lawyers. So you pay the lawyers
today; you finally get your patent and by
0:19:13.190,0:19:15.639
the way, if they turned down the patent, you
could write it off.
0:19:15.639,0:19:20.039
But you actually had something worthwhile;
so you got it, and you had to amortize. Then
0:19:20.039,0:19:25.869
if you had to sue somebody to defend your
patent, you had to put all of that into, if
0:19:25.869,0:19:31.249
you will, a longterm depreciation schedule
because the government wanted your profits
0:19:31.249,0:19:36.070
today, even if you had spent them in trying
to create profits for the future.
0:19:36.070,0:19:41.070
Isn't that basically the same kind of wrongminded
thinking that American companies are seeing?
0:19:41.070,0:19:47.059
Except in your case it's a drill bit, that
when you dull the drill bit, you break a bunch
0:19:47.059,0:19:51.799
of equipment as you're drilling down, and
you set it aside and send it off to salvage.
0:19:51.799,0:19:55.470
It's gone. You've spent you bought it, you
paid for it, you spent it, and you disposed
0:19:55.470,0:19:59.529
of it. They now want you to amortize that
over the useful life of the oil well.
0:19:59.529,0:20:04.779
Isn't that essentially what because you say
intangible. And to me, money out of my pocket
0:20:04.779,0:20:10.419
that I know I spent, that they want me to
pretend I didn't spend for 20 years, that's
0:20:10.419,0:20:13.200
not intangible. Is that the intangible we're
talking about here today?
0:20:13.200,0:20:18.970
[Mr. Zierman] That's exactly right. We're
talking about mud, cement, testing, some drilling
0:20:18.970,0:20:22.799
operations that you're talking about, all
the things that are happening before a well
0:20:22.799,0:20:25.100
is completed or any production has come online.
0:20:25.100,0:20:31.029
[Chairman Issa] You know what's amazing is
America is a funny place. We talk about how
0:20:31.029,0:20:37.739
we support business, we really care about
it; but people in Washington, in my position,
0:20:37.739,0:20:39.119
have done some amazing things.
0:20:39.119,0:20:44.769
I was in private business when NAFTA was passed.
And whether you were for or against NAFTA,
0:20:44.769,0:20:49.009
one day I found out NAFTA had been signed,
and I found out as a result of NAFTA, I was
0:20:49.009,0:20:55.039
going to have to wiretransfer weekly my payroll
withholding taxes instead of sending a check.
0:20:55.039,0:20:59.769
And the reason was because your predecessor,
Bill Thomas, and all the other guys, they
0:20:59.769,0:21:04.559
had a couple of billion they needed revenue
to make NAFTA pencil out. So they got it by
0:21:04.559,0:21:10.549
accelerating the speed with which every business
in America would send money to the government.
0:21:10.549,0:21:14.580
Now, it only scores a onetime event because
they just accelerated the speed with which
0:21:14.580,0:21:20.039
they got it from a couple of weeks or a quarter
for small companies to immediate.
0:21:20.039,0:21:25.700
We're still doing that today, and it's one
of the frustrations I have. I want your industry
0:21:25.700,0:21:31.590
to expense everything, absolutely, that is
consumed. I certainly want you to capitalize
0:21:31.590,0:21:36.489
your longterm assets. If you've got a casing
there, it's reasonable to have it over the
0:21:36.489,0:21:43.139
life. But I want your capital to be put back
to work as quickly as possible. I want Devon
0:21:43.139,0:21:48.309
Energy to have a smaller bank line to put
in more wells. And the amazing thing is, I
0:21:48.309,0:21:51.909
can't get my government to go along. I can't
even get the Ways and Means Committee to go
0:21:51.909,0:21:52.389
along.
0:21:52.389,0:21:58.460
Let me go to another question that I wanted
to understand, because fracking, which is
0:21:58.460,0:22:02.549
not new technology, isn't what we're talking
about here today. What we're talking about
0:22:02.549,0:22:03.629
is better fracking.
0:22:03.629,0:22:04.179
Is that right?
0:22:04.179,0:22:06.559
[Mr. Whitsitt] That's right. The new applications
of fracking.
0:22:06.559,0:22:12.039
[Chairman Issa] And if I understood correctly,
if we're concerned about the watershed, we've
0:22:12.039,0:22:15.820
been concerned about it for 60 years, because
you've been fracking for 60 years.
0:22:15.820,0:22:17.210
[Mr. Whitsitt] Correct.
0:22:17.210,0:22:22.419
[Chairman Issa] And we should know we shouldn't
need Secretary Chu to endlessly study something
0:22:22.419,0:22:23.980
you've been doing for 60 years.
0:22:23.980,0:22:30.960
Let me understand something. When you go down
once but you go far further, as far as what
0:22:30.960,0:22:36.190
you yield, the only difference in that is
that you have only have one area of risk,
0:22:36.190,0:22:40.470
which is that casing, for far greater gain.
Is that correct?
0:22:40.470,0:22:47.190
[Mr. Whitsitt] The casing is placed for a
couple of reasons. One, we've been talking
0:22:47.190,0:22:52.049
about, obviously, is to protect the water
sources. That's primary, and it happens in
0:22:52.049,0:22:58.279
every well. There are other applications of
casing, to prevent the hole from collapsing
0:22:58.279,0:23:03.259
and those kinds of things. But the fact is
and what I think you're alluding to is that
0:23:03.259,0:23:07.149
we've been doing this for a long time. The
technology gets better; the materials gets
0:23:07.149,0:23:13.499
stronger; the knowledge of how we do this
and many times we do it along that horizontal
0:23:13.499,0:23:18.110
length of pipe it all improves. And we've
seen remarkable efficiency gains.
0:23:18.110,0:23:22.980
And one more thing that is really remarkable
today is: We're doing much more of what we
0:23:22.980,0:23:28.279
call "pad drilling," where we can actually
do these multiple horizontal wells from one
0:23:28.279,0:23:34.739
surface location so that we don't have to
disturb the surface multiple places around
0:23:34.739,0:23:38.190
this gas field. So, again, the technology
just continues to improve.
0:23:38.190,0:23:41.869
[Chairman Issa] Well, and that's what I was
leading to. And I appreciate your clarifying
0:23:41.869,0:23:46.480
my questionable question, because this is
something where I'm still learning what you've
0:23:46.480,0:23:49.690
spent a lifetime knowing.
0:23:49.690,0:23:53.899
You've got less exposure to the watershed
because you're going less times for the total
0:23:53.899,0:23:54.789
amount you're getting.
0:23:54.789,0:23:56.450
[Mr. Whitsitt] Correct.
0:23:56.450,0:24:03.450
[Chairman Issa] Your risk, of course, always
is when you first drill through a water area,
0:24:03.830,0:24:07.320
until you get it sealed and you're comfortable
and all the tests are done, there's always
0:24:07.320,0:24:09.039
some risk.
0:24:09.039,0:24:13.580
Let's just say hypothetically that you hit
oil, because, on occasion, the earth's oil
0:24:13.580,0:24:17.519
is much closer than you thought it would be,
but you eliminated all that risk before you
0:24:17.519,0:24:24.519
start going horizontal. So in a sense, horizontal
is getting more from this already mitigated,
0:24:24.739,0:24:31.739
small risk that you had when you first drilled,
what I guess in Oklahoma is what is it, 1.2
0:24:32.369,0:24:34.679
million wells they've drilled or something?
0:24:34.679,0:24:39.039
[Mr. Whitsitt] We've drilled a lot of wells
and fracked 100,000 of them in Oklahoma.
0:24:39.039,0:24:44.999
But also, the other point I would make too,
Congressman, is that in the shale plays, in
0:24:44.999,0:24:50.179
particular, which is really the revolutionary
thing now, once we are there
0:24:50.179,0:24:53.340
[Chairman Issa] This is heavy, by the way.
Even if you didn't pick this up when I set
0:24:53.340,0:24:56.429
it back down, you've got to figure, this is
pretty darn dense rock.
0:24:56.429,0:25:00.379
[Mr. Whitsitt] It's pretty amazing that we're
actually getting the gas to migrate through
0:25:00.379,0:25:02.159
that rock to the wellbore.
0:25:02.159,0:25:08.480
And what I was going to say is that, also,
when we are doing this in the shale plays,
0:25:08.480,0:25:13.919
it almost becomes a in those particular areas
something that we can replicate with less
0:25:13.919,0:25:17.820
and less almost zero risk. Of course, there's
always some.
0:25:17.820,0:25:22.950
But I think in the Barnett Shale, I don't
think we had a dry hole in thousands of wells
0:25:22.950,0:25:27.779
for Devon. But that's because we've finally
nailed this technology. It's right to your
0:25:27.779,0:25:33.269
point, that it's American ingenuity, it's
innovation, trying to put these things together
0:25:33.269,0:25:35.480
in different ways in these different shale
plays.
0:25:35.480,0:25:38.619
[Chairman Issa] Now, I'm only going to have
about two more questions, but they're going
0:25:38.619,0:25:44.249
to probably be ambiguous; so steer me through
to the right answer to the questionable question.
0:25:44.249,0:25:49.350
When you used to go down and try to find a
pocket of gas, methane, et cetera, et cetera,
0:25:49.350,0:25:53.330
all the combinations of what you find down
there, it was hideandgoseek, and then when
0:25:53.330,0:25:58.059
you found it, it could be quite a surprise.
There was a risk because this is volatile;
0:25:58.059,0:26:01.730
you don't know what pressure you're going
to poke into and so on. You're out of that
0:26:01.730,0:26:07.700
business for the most part. You're going into
a low pressure but into rock rather than into
0:26:07.700,0:26:09.570
a big pocket of gas with this technology.
0:26:09.570,0:26:10.029
Isn't that true?
0:26:10.029,0:26:15.109
[Mr. Whitsitt] Well, the pressures do vary.
There are some highpressure areas and lowerpressure
0:26:15.109,0:26:16.139
areas.
0:26:16.139,0:26:21.999
And I would say too that, as was mentioned
earlier, along with the improvement in the
0:26:21.999,0:26:26.389
completion techniques of the fracking and
the drilling of the wells, we have had very
0:26:26.389,0:26:33.039
significant, and continue to have very significant,
seismic and geophysics type of technology
0:26:33.039,0:26:37.909
improvements. And, again, it's putting all
that together so that we know where we're
0:26:37.909,0:26:44.090
going to find resources more accurately and
we can drill fewer wells to find them and
0:26:44.090,0:26:44.749
have more success.
0:26:44.749,0:26:49.840
[Chairman Issa] The reason I ask that question
is: Like most people who don't know your technology,
0:26:49.840,0:26:56.840
who watch TV, I had watched some years ago
about what happens if you hit that pocket
0:26:58.470,0:27:04.789
and you shatter the impermeable layer that
had kept it there for a long time. You can,
0:27:04.789,0:27:10.159
in fact, have natural gas flowing freely to
the surface, and that has happened a few times
0:27:10.159,0:27:13.580
in history, at least enough for television
to capture it.
0:27:13.580,0:27:18.200
In the case of this technology, you're going
through the impermeable layer, through the
0:27:18.200,0:27:23.460
sand that was already there, back into the
core rock that had not released it. So in
0:27:23.460,0:27:29.129
a sense, it's a much safer operation because
you're not up against, if you will, the great
0:27:29.129,0:27:32.289
protection against gas freeflowing up.
0:27:32.289,0:27:37.559
[Mr. Whitsitt] It's much safer, and it's much
safer for other reasons as well, which is
0:27:37.559,0:27:43.609
that our materials and our processes and our
practices are so much better today as we've
0:27:43.609,0:27:47.330
learned through the years because of the very
incidents that you've talked about.
0:27:47.330,0:27:50.749
[Chairman Issa] Now, one last question for
you, and then Rock's got an answer for a question
0:27:50.749,0:27:53.809
that I asked earlier, I think.
0:27:53.809,0:27:59.080
This is a heck of a solid piece of rock. I
looked at your presentation. And as I look
0:27:59.080,0:28:05.149
at you going diagonally here and then there,
I get the feeling that there's no question
0:28:05.149,0:28:11.609
you're releasing more than otherwise was released.
Is there available technology or an available
0:28:11.609,0:28:16.269
percentage you can give me? What did we used
to get when we just caught what happened to
0:28:16.269,0:28:21.590
have bubbled up and was sitting there under
the withholding chamber, what are we getting
0:28:21.590,0:28:27.899
today when you frack, typically, and how much
is really down there if you continue to improve
0:28:27.899,0:28:30.799
your fracking to where you can sort of get
it all?
0:28:30.799,0:28:34.979
[Mr. Whitsitt] Well, I don't know how to answer
the first part of the question in a global
0:28:34.979,0:28:38.619
sense, but if you look at that one slide,
there's a very dramatic representation from
0:28:38.619,0:28:39.799
one area.
0:28:39.799,0:28:44.989
But I will say that the Potential Gas Committee
and these are the resource estimators that
0:28:44.989,0:28:49.369
are the experts in this country and, really,
known worldwide they've just come out with
0:28:49.369,0:28:55.629
yet another estimate of more natural gas that's
recoverable in this country, something on
0:28:55.629,0:29:02.389
the order of probably in North America, 2,500
trillion cubic feet, at least 20 trillion
0:29:02.389,0:29:04.489
or so a year now.
0:29:04.489,0:29:09.649
So you can see. It's well more than a hundred
years, it continues to grow with technology.
0:29:09.649,0:29:10.700
And that's got to be exciting.
0:29:10.700,0:29:13.609
[Chairman Issa] Well, certainly for those
of us who heard that we were going to get
0:29:13.609,0:29:20.210
our last drop of oil or our last drop of gas
and we were going to need renewables already
0:29:20.210,0:29:25.019
because it was all going to be gone, to find
out that there's plenty more, obviously, I'm
0:29:25.019,0:29:29.559
excited about oil, because I don't want us
importing oil from unfriendly areas. But I'm
0:29:29.559,0:29:33.749
even more excited about natural gas, because
all of the green lobbyists who have ever come
0:29:33.749,0:29:39.619
to see me and many have they all talk about
how if we can just get off that dirty coal
0:29:39.619,0:29:44.259
and get onto clean natural gas, what the benefit
would be. Thank you for what your company
0:29:44.259,0:29:51.259
is doing to take us from "X" carbon per Btu
to a fraction of what it would be if we go
0:29:52.179,0:29:54.479
from coal to natural gas.
0:29:54.479,0:29:56.479
And, Rock, you get the last answer to that
question.
0:29:56.479,0:29:59.940
[Mr. Zierman] Well, I just wanted to mention
another application of the directional drilling,
0:29:59.940,0:30:05.059
and that is: Offshore California. Offshore
production is a very emotional issue on the
0:30:05.059,0:30:10.289
West Coast, but I want people to be cognizant
of the fact that you can utilize this technology
0:30:10.289,0:30:11.789
offshore California